H., we always have our parties at home, and it always works out really well! If you have a theme picked out, you can google search that theme and there will be links to decorating ideas, printable activities, and games based on that theme. For the kids' ages, you can also search preschool worksheets and find good stuff to keep them busy.
Here's what our party usually looks like: We get a helium canister from Target and fill the baloons to decorate the living room. Crepe paper streamers are also a cheap decoration that looks instantly festive. We set up a folding table and chairs there and set out crayons and coloring sheets based on the theme. We also sort through the kids' toys for ones that fit the theme and put a laundry basket full of those toys in the living room. When all the guests have arrived, we have a lunch or hearty snack. Next, we have an active game or two (like a race or relay). Finally it is time for cake and presents. Usually I have the party for three hours or so, and we haven't ever run out of stuff to do. My kids like having their friends over and usually are happy to play without much guidance and direction.
Cakes can be easy, too. Just get a couple cheap-y toys and add sprinkles to the top of the cake. Instant magic for a four year old! Have fun :)